The cryptocurrency market expects Bitcoin (BTC) to reach $100,000, but as global M2 money supply grows in 2025, BTC may see an even larger increase.
Global Liquidity Growth: Bitcoin Catalyst?
Real Vision's cryptocurrency analyst, Jamie Coutts, has noted the impact of X on global M2 money supply over the past few years.
Global M2 money supply has risen to $105 trillion from $94 trillion in Q4 2022, according to Coutts. The market valuation of Bitcoin has increased fivefold, from $400 billion to about $2 trillion at the time of writing. He added:
Bitcoin, like gold and stocks, has captured 10% of the new money supply from the fiat monetary system. What happens if M2 increases by 30T in this cycle?
Due to global liquidity issues, global M2 money supply is expected to reach $127 trillion by 2025, up 18% from $107 trillion. BTC prices could skyrocket in 2025 if it captures 10% of this additional liquidity, or $2 trillion.
Coutts provided the following graphic comparing the expansion of the Federal Reserve's balance sheet, M2 money supply growth, real wage growth, and Bitcoin price performance to support his claims. BTC has outperformed other assets, especially as supply increases and the US dollar depreciates.
An increase in money supply could boost Bitcoin, although researchers disagree on the extent of this relationship. Global M2 money supply - cash and short-term bank deposits - is predicted to peak in January 2026 before dropping to $118 trillion by the end of that year. Bitcoin could reach $150,000 on this path.
But cryptocurrency expert Joe Consorti says that BTC's relationship with global M2 money supply could pull it down by 20% to 25%, to around $70,000. BTC is too unpredictable to track with anything, entrepreneur David Quintieri said.
With the U.S. approval of spot Bitcoin exchange-traded funds (ETFs), the upcoming Bitcoin Halving event, increased institutional adoption, and a pro-crypto victory for Donald Trump in the November elections, 2024 is a crucial year for the leading cryptocurrency.
